A quick guide to PPF withdrawals

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In an earlier article, we had given you a brief guide to the PPF or Public Provident Fund. The PPF has a tenure of 15 years. Upon the maturity of the PPF, you can either withdraw the PPF corpus, extend the PPF account and keep contributing or extend the PPF account without more contributions. However, you have to actively pick on of these options and fill up relevant forms. Otherwise, you stand to lose the tax benefits on the account/run into other difficulties.

The PPF Account matures in 15 years, not from the opening date, but from the end of the financial year of opening. So if you have opened the account on 1st August 2018, the account will mature on 1st April 2034. On maturity you can do one of the following:

Close the account and withdraw PPF corpus

In order to do this, you have to intimate the bank or post office with which you have opened the account. The PPF money will not automatically get credited to your savings account like an FD.

Extend the account with contributions

You can extend the PPF account and keep contributing to it. These extensions can be done in blocks of five years. These additional contributions are also tax deductible under Section 80C. However, you have to intimate the bank/post office of this by filling Form H within a year of PPF account maturity. Failure to submit this form will lead to your subsequent contributions being treated as irregular and denied tax deductions. Also, you will not get any interest on these additional contributions.

Extend the account without contributions

You can simply extend the account in blocks of 5 years without making any further contributions. You don’t need to fill any form for this, your account will be extended by default in the absence of any instruction from you. Your existing corpus will continue to earn tax-free interest.

You cannot move from this option to the ‘with contributions’ option within each block of five years.

Partial withdrawals

If you have extended the account with contributions, you can only make one partial withdrawal per year. This withdrawal or withdrawals cannot deplete the account balance below 60% of its value at the time of the extension. The withdrawal must be made by filling up Form C.

If you have extended without contributions, once again, you can only make one partial withdrawal per year. However, in this case, the 60% restriction is gone and you can withdraw any amount up to 100% of the balance.